The Minimum Sum is the amount that must be retained in Central Provident Fund (CPF) for retirement when a member turns 55. 50% of the sum can be in the form of a pledge from a property purchased with CPF savings. The Minimum Sum provides CPF members with monthly payouts during retirement. It varies from the age of individuals and is adjusted with inflation. When a member turns 55, money from his Special and Ordinary accounts will be transferred into a newly-formed Retirement account. The Retirement account will hold up to S$155,000 or it varies with his age-group. Any extra will continue to grow in his respective accounts.
A member can still withdraw up to the first $5,000 from his CPF account even though he is unable to meet the Minimum Sum as the CPF board will immediately pledge the property he purchase during his CPF for up to half the Minimum Sum. Upon reaching 65 years of age, members will get monthly payouts, depending on the cash savings he has in his Retirement account. For members who do not make any withdrawal, money in their Ordinary account will earn up to 3.5% per annum. For Special, Medisave and Retirement accounts, the current interest rate is up to 5% annually.
Members can choose not to set aside the Minimum Sum unless they have purchased life annuity with payouts that is equivalent or more than their expected retirement sum. Over the years, the minimum Sum was set at $80,000 in 2003 and has rose over the years to match up with inflation and higher standard of living.
Will you reach the minimum sum when you retire? Are you aware how much do you need for retirement? Besides CPF’s retirement account, do you have other sources of money for retirement? What happens if you do not have enough for retirement and you are too old and weak to work?